By Jan Sluis-cremer - Institutional Sales Specialist (Feb-17)
The rand continuing to track gains on Friday and trading down to 18.30 in the late afternoon session. Overall the rand finishing the week with a gain of around 0.40% and in line with all Emerging Market currencies with the exception of the Turkish lira that lost 0.66% in the week.
On Thursday President Trump announced that he would impose reciprocal tariffs on all countries that put import duties on the US. However this is going to take some time to draw up, so in the interim there is some breathing space for global markets.
On Wednesday all eyes will be on the Finance Minister when he delivers his budget speech to parliament. The Finance Minister may be considering raising VAT, personal income and corporate taxes to offset a revenue shortfall which was reported in the media over the weekend.
In the Asian session this morning, most currencies traded slightly weaker ahead of a US bank holiday today and concerns over new tariffs coming from Donald Trump’s administration. The Japanese yen was the outlier, which strengthened after better than expected fourth quarter GDP data.
The rand starts the week off at 18.35 to the green back. With today being a US holiday and our local budget on Wednesday we look for ranges to continue.18.25 to 18.55 trades for now.
Against the crosses:
On the data front today the only data out is from the Euro zone at midday local time when they publish their December trade balance number.
(Feb-13) CPI print yesterday supported FEDs decision to hold rates steady and the general talks between US and Rassia to end the war has boosted risk sentiments.
(Feb-17) We saw a general USD weakness on Friday across the board which was related to various factors and optimism around de-escalating geopolitical risks, this however is still not yet confirmed.
(Feb-10) SA’s Finance Minister, Enoch Godongwana, will deliver the 2025 Budget Speech on Wednesday, February 19th. The speech will outline the government’s financial, economic, and social commitments for the year, focusing on balancing economic growth with support for vulnerable communities.
(Feb-17) Volumes improved towards the end of the week, with 3 days trading higher that the recent ADV.
(Feb-13) Clients ended yesterday being net-short ZAR: - Range for today: 18.60 - 18.30.
(Feb-17) Saw the market reject the move lower in ZAR, with implied topside at 18.65.
(Feb-10) Clients are now net-long USDZAR.
(Feb-11) We see continued net-long positions in ZAR.
(Feb-14) ZAR not showing any trend for now:
(Feb-17) Saw the market reject the move lower in ZAR, however the the weaker USD on Friday (Feb-14) saw ZAR hitting lows of 18.2995.
(Feb-14) Spreads remain surprisingly narrow today, due to the unexpected sudden move lower in ZAR. This move seems to have been largely driven by a general USD weakness.
By Thuto Mukena - Institutional Sales Specialist (Feb-17)
The 1-week USD/ZAR volatility risk premium has slightly narrowed below its 1-week average as risk conditions remain calm. While Trump’s tariff plans continued to drive sentiment last week, the lack of an immediate implementation provided some relief to financial markets. As a result, the 1-week USD/ZAR implied vol tracked spot moves lower, closing at 11.52%, down 0.58 vol points on the day. This morning, implied vols opened slightly bid, though moves should remain limited given the U.S. is out for Presidents’ Day. The key event for the week will be Wednesday’s local CPI print, with consensus expecting inflation to ease slightly from 3.6% y/y to 3.5% y/y.
Both G10 and EM implied vols softened as risk conditions remained stable. In G10, EUR/USD 1-week implied vol saw the biggest move, dropping 150bps from the open, while GBP/USD followed, declining 125bps.In high-beta EM, implied vols tracked spot as EM currencies strengthened on the day. USD/MXN 1-week implied vol fell sharply, down 232bps, while USD/INR 1-week implied vol also edged lower, closing 76bps below the open.
By sizwe Mfayela - Institutional Sales Specialist (Feb-14)
Egypt
Kenya
Ivory Coast
Nigeria
Rwanda
Senegal
Zimbabwe
Eurobonds
NGERIA
ANGOL: Locals sold into ETF and street bids
IVYCST: Flows were relatively light, but overall turned two-way, with the bid for the $ bonds on the curve going softer.
KENINT: Some fiscal-related headlines yesterday but flows were muted, with locals net sellers of risk to add to the real money account selling.
SENEGL: Was very much in price discovery in a 3pt range since the headlines hit on Wednesday as bid and offers felt very skittish, forcing swift repricing on each print. Overall, SENEGL underperformed on the day with the curve bear flattening.
SOAF: An active session with headlines keeping flows on the curve two-way. US PPI came out higher than expected - after a higher-than-consensus CPI print yesterday - but that softened the bid only for a split second. Real money and ETFs were net buyers of risk, whilst there was selling from the street. Long-end continued to trade better, with front-end bonds catching a bid.
Economic data releases